Question 1

Tax incidence is the

Accepted Answer

A) burden buyers have to absorb from a tax on goods and services. 
B) burden sellers have to absorb from a tax on goods and services. 
C) lost revenue the government endures from goods and services that are not taxed. 
D) division of the burden of a tax between the buyer and the seller. 
E) deadweight loss created by a tax. 
A) burden buyers have to absorb from a tax on goods and services. 
B) burden sellers have to absorb from a tax on goods and services. 
C) lost revenue the government endures from goods and services that are not taxed. 
D) division of the burden of a tax between the buyer and the seller. 
E) deadweight loss created by a tax.

Question 2

Giving in to the demand of protestors,suppose the French government reduces the tax on gasoline by 15 percent.Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.As a result of the tax cut,the price for a gallon of gasoline paid by buyers

Accepted Answer

A) falls by 15 percent. 
B) rises by 15 percent. 
C) falls by less than 15 percent. 
D) rises by less than 15 percent. 
E) falls by more than 15 percent. 
A) falls by 15 percent. 
B) rises by 15 percent. 
C) falls by less than 15 percent. 
D) rises by less than 15 percent. 
E) falls by more than 15 percent.

Question 3

-The above figure shows a labor market with a minimum wage of $8 an hour.The value of the resources workers are willing to use in their job search equals the distance between point ________ and point ________.

Accepted Answer

A) a;d 
B) a;b 
C) b;c 
D) a;c 
E) c;d 
A) a;d 
B) a;b 
C) b;c 
D) a;c 
E) c;d

Question 4

Nonunion labor is a substitute for union labor,so when the minimum wage ________,the demand for union labor ________.

Accepted Answer

A) rises;decreases 
B) decreases;increases 
C) decreases;decreases 
D) rises;increases 
E) rises;remains the same 
A) rises;decreases 
B) decreases;increases 
C) decreases;decreases 
D) rises;increases 
E) rises;remains the same

Question 5

Explain why a price floor set below the equilibrium price is ineffective.

Accepted Answer

Price floors are legal minimums;it is le

Question 6

Cigarettes are highly addictive and therefore have a very low elasticity of demand.A $2.00 increase in the national sales tax on cigarettes would likely cause the price paid by buyers of cigarettes to

Accepted Answer

A) increase by more than $1.00 but less than $2.00. 
B) increase by $2.00. 
C) increase by more than $2.00. 
D) increase by less than $1.00. 
E) remain unchanged. 
A) increase by more than $1.00 but less than $2.00. 
B) increase by $2.00. 
C) increase by more than $2.00. 
D) increase by less than $1.00. 
E) remain unchanged.

Question 7

Tax incidence is the

Accepted Answer

A) dollar amount of a tax,expressed as a percentage of the purchase price. 
B) dollar amount of a tax per unit sold. 
C) division of a tax burden between the buyer and seller. 
D) amount of revenue collected by government on a specific good. 
E) deadweight loss from the tax. 
A) dollar amount of a tax,expressed as a percentage of the purchase price. 
B) dollar amount of a tax per unit sold. 
C) division of a tax burden between the buyer and seller. 
D) amount of revenue collected by government on a specific good. 
E) deadweight loss from the tax.

Question 8

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1.If the government imposes a tax on the product,then

Accepted Answer

A) buyers and sellers pay exactly the same share of the tax. 
B) buyers pay all of the tax. 
C) sellers pay all of the tax. 
D) buyers pay a smaller share of the tax than do sellers,but both buyers and sellers pay some of the tax. 
E) because the elasticity of demand is zero,the government collects no revenue from this tax. 
A) buyers and sellers pay exactly the same share of the tax. 
B) buyers pay all of the tax. 
C) sellers pay all of the tax. 
D) buyers pay a smaller share of the tax than do sellers,but both buyers and sellers pay some of the tax. 
E) because the elasticity of demand is zero,the government collects no revenue from this tax.

Question 9

If the government imposes an effective ________,a deadweight loss ________.

Accepted Answer

A) price floor;does not occur 
B) price ceiling;does not occur 
C) price ceiling;occurs 
D) price support;does not occur 
E) Both answers C and D are correct. 
A) price floor;does not occur 
B) price ceiling;does not occur 
C) price ceiling;occurs 
D) price support;does not occur 
E) Both answers C and D are correct.

Question 10

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton.To keep the price at this level,the government will ________ million tons of wheat.

Accepted Answer

A) purchase 300 
B) sell 400 
C) purchase 100 
D) purchase 250 
E) sell 300 
A) purchase 300 
B) sell 400 
C) purchase 100 
D) purchase 250 
E) sell 300

Question 11

The figure above shows the market for sugar beets.The government intervenes in this market and sets a support price at $35 a ton.
-The figure above shows that to make the price support work,the government buys ________ million tons of sugar beets.

Accepted Answer

A) 10 
B) 20 
C) 30 
D) 5 
E) 15 
A) 10 
B) 20 
C) 30 
D) 5 
E) 15

Question 12

-The above figure shows the market for winter jackets.In an effort to keep the nation warm,the president places a price ceiling of $100 in the market for winter jackets.What would be the maximum price someone would pay in the black market?

Accepted Answer

A) $100 per jacket 
B) $120 per jacket 
C) $130 per jacket 
D) $90 per jacket 
E) $140 per jacket 
A) $100 per jacket 
B) $120 per jacket 
C) $130 per jacket 
D) $90 per jacket 
E) $140 per jacket

Question 13

Suppose the equilibrium wage rate for apricot pickers is $7.00 per hour and at that wage rate the equilibrium quantity of apricot pickers employed is 14,000.If the minimum wage is set at $7.50 per hour,then the

Accepted Answer

A) quantity of apricot pickers employed increases. 
B) quantity of apricot pickers employed decreases. 
C) quantity of apricot pickers employed does not change. 
D) wage rate for apricot pickers decreases. 
E) quantity of apricot pickers demanded does not change,and the quantity of apricot pickers supplied does not change. 
A) quantity of apricot pickers employed increases. 
B) quantity of apricot pickers employed decreases. 
C) quantity of apricot pickers employed does not change. 
D) wage rate for apricot pickers decreases. 
E) quantity of apricot pickers demanded does not change,and the quantity of apricot pickers supplied does not change.

Question 14

-The graph shows the labor market for painters.The lower the wage rate,the ________ is the quantity of painters that firms demand and the ________ is the quantity of painters that households are willing to supply.

Accepted Answer

A) greater;smaller 
B) greater;greater 
C) smaller;greater 
D) smaller;smaller 
E) None of the above answers is correct because both the demand and supply curves will shift in response to the change in the wage rate. 
A) greater;smaller 
B) greater;greater 
C) smaller;greater 
D) smaller;smaller 
E) None of the above answers is correct because both the demand and supply curves will shift in response to the change in the wage rate.

Question 15

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

Accepted Answer

Many teenage and low-skilled workers ear

Question 16

Imposing a sales tax on sellers of a product has an effect that is similar to which of the following?

Accepted Answer

A) a decrease in consumers' preferences for the good 
B) an increase in the costs of production 
C) an increase in demand for the good 
D) a decrease in people's willingness to work 
E) anything that decreases the demand and shifts the demand curve leftward 
A) a decrease in consumers' preferences for the good 
B) an increase in the costs of production 
C) an increase in demand for the good 
D) a decrease in people's willingness to work 
E) anything that decreases the demand and shifts the demand curve leftward

Question 17

-The above figure shows the market for winter jackets.In an effort to keep the nation warm,the president places a price ceiling of $100 in the market for winter jackets.When the price ceiling is in place and taking account of the resources lost in search,consumer surplus ________ and producer surplus ________ compared to the equilibrium before the price ceiling was imposed.

Accepted Answer

A) decreases;increases 
B) decreases;decreases 
C) increases;increases 
D) increases;decreases 
E) does not change;increases 
A) decreases;increases 
B) decreases;decreases 
C) increases;increases 
D) increases;decreases 
E) does not change;increases

Question 18

-The graph shows the market for cell phones.The government imposes a sales tax on cell phones at $10 a cell phone.The excess burden of the sales tax on cell phones is

Accepted Answer

A) $20,000. 
B) $15,000. 
C) $35,000. 
D) $7,500. 
E) $30,000. 
A) $20,000. 
B) $15,000. 
C) $35,000. 
D) $7,500. 
E) $30,000.

Question 19

The loss to society resulting from a tax includes the

Accepted Answer

A) deadweight loss. 
B) consumer surplus paid to the government in the form of tax revenue. 
C) producer surplus paid to the government in the form of tax revenue. 
D) deadweight loss plus the consumer surplus and producer surplus paid to the government as tax revenue. 
E) deadweight loss minus the tax revenue collected by the government. 
A) deadweight loss. 
B) consumer surplus paid to the government in the form of tax revenue. 
C) producer surplus paid to the government in the form of tax revenue. 
D) deadweight loss plus the consumer surplus and producer surplus paid to the government as tax revenue. 
E) deadweight loss minus the tax revenue collected by the government.

Question 20

With a rent ceiling set below the equilibrium rent,
I.all renters are able to rent apartments at a lower rent.
Ii.there is a shortage of apartments.
Iii.the quantity of apartments supplied does not change because buildings cannot be moved.

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) ii and iii 
E) i,ii,and iii 
A) i only 
B) ii only 
C) iii only 
D) ii and iii 
E) i,ii,and iii

Tax incidence is the

Giving in to the demand of protestors,suppose the French government reduces the tax on gasoline by 15 percent.Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.As a result of the tax cut,the price for a gallon of gasoline paid by buyers

-The above figure shows a labor market with a minimum wage of $8 an hour.The value of the resources workers are willing to use in their job search equals the distance between point and point .

Nonunion labor is a substitute for union labor,so when the minimum wage ,the demand for union labor .

Explain why a price floor set below the equilibrium price is ineffective.

Cigarettes are highly addictive and therefore have a very low elasticity of demand.A $2.00 increase in the national sales tax on cigarettes would likely cause the price paid by buyers of cigarettes to

Tax incidence is the

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1.If the government imposes a tax on the product,then

If the government imposes an effective ,a deadweight loss .

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton.To keep the price at this level,the government will ________ million tons of wheat.

The figure above shows the market for sugar beets.The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that to make the price support work,the government buys ________ million tons of sugar beets.

-The above figure shows the market for winter jackets.In an effort to keep the nation warm,the president places a price ceiling of $100 in the market for winter jackets.What would be the maximum price someone would pay in the black market?

Suppose the equilibrium wage rate for apricot pickers is $7.00 per hour and at that wage rate the equilibrium quantity of apricot pickers employed is 14,000.If the minimum wage is set at $7.50 per hour,then the

-The graph shows the labor market for painters.The lower the wage rate,the is the quantity of painters that firms demand and the is the quantity of painters that households are willing to supply.

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

Imposing a sales tax on sellers of a product has an effect that is similar to which of the following?

-The graph shows the market for cell phones.The government imposes a sales tax on cell phones at $10 a cell phone.The excess burden of the sales tax on cell phones is

The loss to society resulting from a tax includes the

With a rent ceiling set below the equilibrium rent, I.all renters are able to rent apartments at a lower rent. Ii.there is a shortage of apartments. Iii.the quantity of apartments supplied does not change because buildings cannot be moved.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 7: Government Actions in Markets

Tax incidence is the

Giving in to the demand of protestors,suppose the French government reduces the tax on gasoline by 15 percent.Neither the demand for gasoline nor the supply of gasoline is perfectly elastic or inelastic.As a result of the tax cut,the price for a gallon of gasoline paid by buyers

-The above figure shows a labor market with a minimum wage of $8 an hour.The value of the resources workers are willing to use in their job search equals the distance between point ________ and point ________.

Nonunion labor is a substitute for union labor,so when the minimum wage ________,the demand for union labor ________.

Explain why a price floor set below the equilibrium price is ineffective.

Cigarettes are highly addictive and therefore have a very low elasticity of demand.A $2.00 increase in the national sales tax on cigarettes would likely cause the price paid by buyers of cigarettes to

Tax incidence is the

Suppose the elasticity of demand for a product is 0 and elasticity of supply is 1.If the government imposes a tax on the product,then

If the government imposes an effective ________,a deadweight loss ________.

-The above figure shows the domestic market for wheat.Suppose this market is isolated from global competition and the government intervenes by setting a support price of $15 a ton.To keep the price at this level,the government will ________ million tons of wheat.

The figure above shows the market for sugar beets.The government intervenes in this market and sets a support price at $35 a ton. -The figure above shows that to make the price support work,the government buys ________ million tons of sugar beets.

-The above figure shows the market for winter jackets.In an effort to keep the nation warm,the president places a price ceiling of $100 in the market for winter jackets.What would be the maximum price someone would pay in the black market?

Suppose the equilibrium wage rate for apricot pickers is $7.00 per hour and at that wage rate the equilibrium quantity of apricot pickers employed is 14,000.If the minimum wage is set at $7.50 per hour,then the

-The graph shows the labor market for painters.The lower the wage rate,the ________ is the quantity of painters that firms demand and the ________ is the quantity of painters that households are willing to supply.

Why would an increase in the minimum wage to $15 per hour lead to more unemployment for teenage and low-skilled workers?

Imposing a sales tax on sellers of a product has an effect that is similar to which of the following?

-The graph shows the market for cell phones.The government imposes a sales tax on cell phones at $10 a cell phone.The excess burden of the sales tax on cell phones is

The loss to society resulting from a tax includes the

With a rent ceiling set below the equilibrium rent, I.all renters are able to rent apartments at a lower rent. Ii.there is a shortage of apartments. Iii.the quantity of apartments supplied does not change because buildings cannot be moved.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

-The above figure shows a labor market with a minimum wage of $8 an hour.The value of the resources workers are willing to use in their job search equals the distance between point and point .

Nonunion labor is a substitute for union labor,so when the minimum wage ,the demand for union labor .

If the government imposes an effective ,a deadweight loss .

-The graph shows the labor market for painters.The lower the wage rate,the is the quantity of painters that firms demand and the is the quantity of painters that households are willing to supply.